Outside of its traditional lab-automation and clinical-diagnostics products, Beckman Coulter is focusing its efforts in the life sciences field on developing its next-generation molecular diagnostics platform, and a company official said this week that the firm will stick to tuck-in acquisitions.
Although there has not been an official close to the restructuring begun over a year ago, Robert Raynor, director of investor relations for Beckman Coulter, said that the major actions of the restructuring have been completed and most of the remaining efforts are related to improving its supply-chain operations.
He did not say whether the firm planned on shedding any further product lines or businesses, but suggested that any future acquisitions would follow Beckman’s previous strategy of adding tuck-in businesses rather than buying a firm that would transform the company.
Though Raynor did not mention Beckman Coulter’s molecular diagnostics efforts, recent comments from other company officials and financing efforts have highlighted the importance of that market to the firm.
In July 2005, Beckman began its restructuring and a series of related measures, which included laying off 350 employees — or 3 percent of its workforce — and a shift in its sales focus to leasing instrumentation rather than pursuing sales of big-ticket items (see BioCommerce Week 7/28/2005).
Throughout the process of switching to operating-type leases, “the fundamentals of our business never changed, and we were continuing to grow the company,” Raynor said. “Particularly, we’re seeing good growth rates in our consumables business, because that’s not affected by our leasing change.
“But the growth in our top-line revenue was certainly obscured during this first year. This was primarily a phenomenon in the United States, [because] we were already writing operating-type leases outside of the United States,” he said. “As we’ve lapped this — the first anniversary — at least as we enter the fourth quarter, we have a comparable lease mix structure in the fourth quarter of ’06 as we had in the fourth quarter of ’05.”
Two weeks ago at the Piper Jaffray Health Care Conference in New York, Beckman Senior Vice President Jay Steffenhagen said that the restructuring and shift in sales policy “has really paid off for us. We lived through the pain and now we’re out of it.”
This week, Raynor told BioCommerce Week that the firm expected those actions to save the company $15 million in 2006. “It looks like we’re tracking just ahead of that,“ he said. Raynor noted that the firm is targeting an additional savings of $25 million in 2007 and $30 million in 2008.
“There are a series of ongoing activities,” he said. “Most of the remaining activities are actually related to our supply-chain operations and some improvements that are underway there.”
As part of the restructuring, Beckman had shut down its San Diego-based Cell Analysis and Development Center and stopped marketing its IC 100 high-content screening platform (see BioCommerce Week 11/24/2005).
Raynor did not say whether any further divestitures would take place, but he suggested further acquisitions, such as the recently completed $185 million purchase of Lumigen, were possible.
“With regard to acquisitions, we’ve done basically over the past two years three tuck-in acquisitions, bringing reagent or other technologies into the company — products that we can add to existing platforms. Those are the types of acquisitions we believe create value for the company,” he said.
“If we find additional acquisition candidates that meet those criteria, those are candidates that we would consider. Unfortunately, there are not that many of them, [but] we’re always looking and we’re always evaluating,” said Raynor.
Funding Molecular Dx Development
Though Raynor did not specifically talk about the firm’s molecular diagnostic efforts going forward, Steffenhagen recently highlighted the firm’s current development plans for a next-generation molecular diagnostics platform. He told investors at the Piper Jaffray conference that Beckman planned to launch the new, fully automated instrument around 2010.
The R&D work on that platform is expected to be partially funded by a debt offering announced by Beckman this week. The firm is seeking to raise $525 million from the sale of convertible senior notes due 2036 (see Briefs).
Beckman said that the purpose of the offering was to reduce its interest expense in order to fund research and development activities, including the molecular diagnostics platform.
Beckman jumped into the molecular diagnostics market last year when it launched its Vidiera NsP and NsD instruments, which can be purchased separately but were designed to work in concert. The NsP is a sample-prep instrument, while the NsD is the nucleic sample-detection system based on the firm’s capillary electrophoresis technology.
The firm has since added a nucleic acid sample preparation technology through its acquisition of Agencourt Bioscience and licensed RT-PCR patents from Applera and Roche (see BioCommerce Week 5/5/2005 and 5/31/2006). Both actions are seen as crucial to its development efforts in the molecular diagnostics space.